The End of Retirement is Near

The End of Retirement is Near

One invention of the 20th century that is likely to disappear early in the 21st century is the concept of retirement. Retirement has come to mean that after a period of income- generating work lasting until age 65 or, in recent times, age 60 or even 55, one should cease income generating work. The “final” phase of life is expected to be one dominated by leisure, paid for by savings and benefits accumulated in the employment phase of life.

A surprising number of modern institutions and assumptions have been built around this notion. Now it appears that retirement will go the way of the dodo bird. For those approaching age 50, and the generations to follow, the idea of the end of retirement is a challenge, an opportunity, and certainly a wake up call.

Various myths underlie the concept of retirement. First, that age 65 is old. Second, that those over 65 are not generally capable of useful work. And third, that those remaining in the paid labor force will, through social security tax contributions, pay for the benefits of contemporary retirees.

Each myth is refuted by current realities. Age 65 is no longer old. People are living and maintaining vitality longer, a phenomenon known as down-aging. When the Social Security System was established, the age for collection of benefits was set at age 65, because the planners knew at the time that the average life span was age 63. Thus, few persons were expected to actually collect benefits, with benefits going only to the truly needy. As the century turns the average 65 year old can expect to live another 20 years on average. In the near future people will live even longer, in better health, and unless the retirement concept changes will need to collect retirement benefits for periods averaging 20 to 40 years, perhaps even longer.

The second myth, that people over the age of 65 are not capable of meaningful work also flies in the face of tomorrow’s realities. When retirement began early this century the most common work was manual and depended heavily on strength. People over 65 were indeed old, more similar to the 75 or 80 year old of today. The primary work of tomorrow is knowledge work, requiring little or no manual strength. Research demonstrates quite clearly that maintaining mental activity can sustain a sharp mind far into old age, barring illness. If the culture is short on anything these days it is wisdom, often the unique strength of elders. It can also be pointed out that even muscle strength can be maintained at a far higher level than previously thought, with proper exercise.

Finally, the myth that future workers will support future retirees with social security taxes flies in the face of demographic realities. When the system was established, there were about 20 workers paying an annual tax of $30 to support each retiree. By 2011, when the first baby boomer turns 65, there will be about two workers per retiree, paying an annual tax of up to $15000. Social security, conceived as a kind of insurance, works as a kind of pyramid scheme in which those “in early” benefit the most, and those “in last” may not benefit at all. It is difficult to imagine how such a system can sustain itself, though many proposals are being floated in an attempt to maintain the program.

For a variety of reasons other financial sources are unlikely to be adequate to pay for a 20-40 year retirement. Private pensions are diminishing or disappearing, and harder to accumulate anyway because of the disappearance of the single career job. Home equity is not expected to increase at near the rate of the post World War II years, and those under age 50 are not saving at the rates needed to pay for a long retirement.

The 20th Century concept of retirement was largely deliberately invented. A variety of interests wanted to move people out of the labor force so younger people could be accommodated. The work was not easily done by elders. New industries revolving around investing for retirement and the activities of retirement set out to convince people that retirement was natural, and a kind of new right of modern living. For a time it has seemed to work.

Now however, it seems likely that most 21st Century elders will not retire. They will slow down, work less, work at new things, have some leisure, but continue to engage in useful, income producing work in a variety of arrangements and patterns, perhaps for all of their lives. It is safe to say that the first quarter of the 21st Century will see a great re-invention of the third phase of life, away from classic retirement and toward something like “life fulfillment.” The end of retirement and beginning of life fulfillment may be a kind of liberation.

Glen Hiemstra is a futurist speaker, author, consultant, blogger, internet video host and Founder of Futurist.com. To arrange for a speech contact Futurist.com.